Shell's profits stagnant after fall in world oil prices: Turnaround in chemicals business limits damage

Click to follow
The Independent Online
SHELL has reported flat profits for the first quarter of the year.

The oil group was hit by the fall in world oil prices during the past year, but the effects were mitigated by a profits turnaround in the chemical business. The group was also helped by an increased contribution from refining and selling fuels.

Overall net income slipped 1 per cent to pounds 937m in the three months to 31 March compared with pounds 945m previously.

Profits from oil and gas exploration and production sank 27 per cent from pounds 584m to pounds 425m. The fall was greater than the decline in oil prices over the period and the reduced profit was earned on increased oil production.

The oil price was 23 per cent down on last year. Shell sold oil for an average of dollars 13.95 a barrel in the period, compared with dollars 18.40 in the first part of 1993.

Oil prices have risen above dollars 15 a barrel since the end of Shell's first quarter. But the group believes prices will remain relatively depressed. A spokesman said: 'We do not think there will be any radical changes. The oil price will stay low in the immediate future.'

Crude oil production rose 3 per cent to 2.23 million barrels a day. Output of natural gas was 5 per cent higher at 8.8 billion cubic feet per day.

Cost-cutting in the chemicals business enabled Shell to report pounds 56m profits after losses of pounds 22m previously. Most of the benefit was seen outside North America, where profits climbed to pounds 12m. Losses last year, including a pounds 10m charge for restructuring, were pounds 69m.

Earnings from refining and selling fuel increased by 13 per cent from pounds 431m to pounds 488m. US profits rose to pounds 59m compared with pounds 58m while the contribution from the rest of the world advanced 12 per cent to pounds 417m.

The improved performances in chemicals, refining and marketing were also enough to offset bigger losses on exchange rates.

Currency movements cost Shell pounds 40m in the quarter compared with pounds 25m last time.

Shell is part-owned by Shell Transport and Trading, which has shares listed in London and New York, and by Royal Dutch Shell, based in the Netherlands. Earnings per London listed share were 10.3p compared with 10.1p.

Bottom Line, page 38